The upgrade is a result of a rosier outlook for coal producers operating in the Powder River Basin (PRB) region of Wyoming and Montana. "No other coal deposit on the planet is so big, so close to the surface, and so cheap to mine as the rich seams in eastern Wyoming and southern Montana," according to the Daily Climate.

Despite the rosier outlook, Goldman Sachs thinks there are better options in the sector.

"We still remain concerned about high leverage levels for ACI, its premium relative valuation and the met exposure. For investors seeking exposure to a recovery in the PRB, we prefer Buy-rated Peabody Energy Corp (BTU) as well as Neutral-rated Cloud Peak Energy (CLD), where we see greater upside to our 6-month price targets."

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Separately, TheStreet Ratings team rates ARCH COAL INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ARCH COAL INC (ACI) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, poor profit margins, weak operating cash flow, unimpressive growth in net income and generally high debt management risk."